Intercarrier comp goes to the back burner, for now

FCC Chairman Kevin Martin's effort to reform intercarrier compensation rules is now dead, and the incoming Obama administration has higher priorities on its agenda. Increased broadband availability driven through the economic stimulus package and net neutrality are likely to be the top priorities for the new FCC Chairman. 

What happens when fresh faces at the FCC get around to looking at the issue? Martin's proposal seemed to be a wealth transfer from larger rural carriers to AT&T and Verizon - something that didn't sit well with the rural carriers. Martin proposed a 10-year plan to decrease regulated access charges and reduce arbitrage.

AT&T, Verizon, Qwest and Comcast wanted the FCC to cut the transition period down to five years, but rural carriers fought the proposal. Stifel Nicolas says RLECs get about 12 percent of their total revenue from intercarrier compensation. 

Rural carriers protested about the potential loss of a significant revenue stream, while Martin pointed out that the carriers had historically healthy dividends, and therefore should not be subsidized. Meanwhile, the bigger carriers said they would pass along the expected savings to their customers, lowering phone and long-distance rates.

Back-room negotiations took place between the FCC and rural carriers, with some concessions being squeezed out of the FCC in order to make up for the loss of revenue, including a raise in rural carrier subscriber line charge and the ability to tap into a USF-like fund.

Such concessions indicate the clout rural carriers have compared to the current political power CLECs hold and could be indicative of what might happen when round two of the debate ultimately returns to the FCC's agenda.

For more:
- Telephony ponders what is next. Article.

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